Denver firm wins bidding for Grant

Merit Health gets financing from Jameson Realty

A Denver company backed by a Chicago real estate firm submitted the winning bid Tuesday for Grant Hospital, ending months of haggling between creditors and would-be buyers of the North Side facility.

Merit Health Systems, a start-up for-profit hospital company, bid $23.6 million in cash plus the assumption of $1.6 million in liabilities. Merit expects to close the transaction by the end of the month.

Merit beat out New Jersey-based Solomon Healthcare Corp., which stopped its bidding with a final offer of $23.5 million in cash.

A third bidder, which failed Monday to convince a Cook County Circuit Court judge to allow an agreement to pay unsecured creditors to be included as part of its bid, didn't show up at Tuesday's auction, attorneys handling the sale said. That bidder, a joint effort by Evanston-based Healthcare Transactions Inc. and a group led by Chicago physician Roberto Diaz, had offered $22.2 million as its final cash bid Monday.

"When I called the hospital to let them know it was finally over, there was a sigh of relief and you could feel the enthusiasm," said Jay Weinstein, Merit's chief operating officer. "Now we can get on with what we are here for, and that is caring for patients. We are looking forward to a long-term relationship with the community going forward."

Merit plans to form a new community advisory board to evaluate the facility's capital and service needs,Weinstein said. A new name may also be in the offing, pending feedback from focus groups.

Grant has been in limbo since it was put up for sale last year amid fallout from financial problems of its sister facility, Edgewater Medical Center, which closed last year, having incurred millions of dollars in losses and debts.

About 800 Grant employees as well as physicians and patients have been faced with uncertainty in recent weeks, wondering whether the hospital would remain open or be redeveloped for another use.

The auction process opened up the hospital's sale to all bidders, including real estate companies.

Although the only companies to submit bids were in the health-care business, and potential housing developers decided against bidding, a real estate company will figure prominently in Merit's financing of the transaction.

Chicago-based Jameson Realty Group provided an undisclosed amount of financing to Merit. Merit will lease the hospital's facilities from Jameson. Those facilities include a parking garage and the 213-bed hospital at 550 W. Webster Ave. at the intersection with Lincoln Avenue.

Merit said terms of the arrangement with Jameson include a long-term lease on the Grant properties plus an option to buy.

Formed last year, Merit is trying to establish itself as a player in the for-profit hospital industry. The company has $100 million in a venture capital line from Chicago-based Willis Stein & Partners to buy and recapitalize its first hospitals, according to documents filed in circuit court.

Grant would be Merit's first facility, but Weinstein and other senior Merit managers have worked at for-profit companies and have operated dozens of hospitals in the past.

In fact, Merit is not ruling out future deals in Chicago, which has become fertile ground for cash-strapped hospitals looking for financial partners. Louis A. Weiss Memorial Hospital, for example, recently finalized a joint venture partnership with Nashville-based Vanguard Health Systems, which bought MacNeal Hospital in west suburban Berwyn two years ago.